Does Tesla Model 3 Have Potential To Be An American Best-Seller?

COULD TESLA MODEL 3 BECOME ONE OF AMERICA’S BEST-SELLING CARS?

Elon Musk has said many times that his ambition is not to create the best electric cars, but the best cars, period. Many would argue that he and his team have achieved that goal. But when will the best cars also become the best-selling cars?

Tesla Model 3 may quickly move in on some of America’s best-selling cars (Reddit: sticksonrice)

The Tesla Model S has been the best-seller in the large luxury segment in the US for at least two years. Many have predicted that Model 3 will similarly dominate the small luxury sedan slice of the market. But for the third-generation Tesla to be considered a true mass-market vehicle, it will need to do better than that. What would it take for Model 3 to become one of the top ten passenger cars?

Elon Musk recently predicted that annual global demand for Model 3 would eventually reach about 700,000 cars per year – an increase from his earlier estimate of 500,000. How much are Elon’s forecasts worth? Who knows, but let’s just note that he originally projected Model S demand would be 20,000 cars per year, and it has now grown to about 50,000.

The three top-selling passenger cars in the US in 2016 were the Toyota Camry (388,618), Toyota Corolla (378,210), and Honda Civic (366,927). Model 3 would need to sell over 350,000 per year in the US to have a shot at the podium. Annual sales of 200,000 would be enough to crack the top ten (and edge out the Hyundai Sonata).

We could debate the math, and the value of predictions, endlessly, but it might be more interesting simply to consider the factors that might help or hinder Model 3’s shot at the big leagues.

First let’s consider some untapped potential. Model 3 has racked up 500,000 orders around the world from buyers who’ve never had a test drive, or even a good look at the new model. Tesla has not been promoting it – on the contrary, it has been trying to steer people away from it, and towards the higher-priced Model S. Over the next year, media reviews will start rolling in, people will start seeing Model 3 on the roads, and presumably new features and options will become available. All this is bound to boost demand.

On the other hand, demand is one thing, and deliveries are another. Even if Tesla’s production ramp-up runs as smoothly as an EV on a cement driveway, the company won’t be able to catch up for quite some time. A long waiting list could turn out to be self-regulating – some potential buyers won’t choose to wait a year, and will buy something else.

Let’s assume for a moment that, a few years down the road, Tesla’s production capacity does catch up to demand, and you can order a new Model 3 for delivery in a week or two. Then a car buyer will be able to make a straightforward comparison between Model 3 and all the other cars on the market. What competitors might the Tesla steal customers away from?

As a recent article in CleanTechnica points out, different people buy a Tesla for different reasons – the performance, the hipness factor, the environmental benefits, the gas savings. Therefore, Model 3 could be seen as a competitor for cars in several different classes. It could steal some of the trendy crowd from sporty sedans like the BMW 3 Series, but it could also poach greenies from the Toyota Prius, or other EVs such as the Nissan LEAF or the BMW i3. It’s not inconceivable that Model 3 might make conquests from the top three – after all, a top-of-the-line Camry, with a V6, goes for over $31,000.

On the other hand, by the time Tesla really cranks up production, the vaunted “Tesla-killers” should be showing up in town. Mercedes, Audi, Volkswagen, Hyundai – all claim to have super new EVs in the pipeline. Who will be stealing sales from whom?

At $37K with delivery for any color but black it is easy to see the M3 leading the entry level luxury space but very hard to see it putting a big dent in Camry/Accord sales. While it is true a Camry can be optioned up into the low $30K range the uptake on the V6 top trim models is about 10% and Camry/Accord sell for under list. Plus in areas with cheap gas and moderate to high priced electricity the 2018 Camry hybrid’s running costs (at 50mpg) won’t be that much higher and at $10K less than a model 3 the lifecycle costs are likely to be similar to less over 5-10 years. Most people are more concerned about monthly payments than lifecycle costs anyway. What could change this is if the model 3 has Camry level bullet proof reliability/durability and cheap maintenance. That would lead to higher resale and lower lease costs. But, we won’t know that for many years. Our Rav4 has had <$150 / year in repairs costs and <$100 year in maintenance costs over the last 9 years and this is very typical for "appliance" cars. To me if Tesla wants to play in the space mid-high 20s pricing combined with infrequent and inexpensive repairs is what they need to shoot for. I haven't seen any evidence they want to play in the appliance car space so far. The entry level luxury market is certainly a big enough playground for now and I wish them well in conquering it.

Yes, Tesla will have to seriously drop the price of the Model 3 and future Model Y if they expect to compete in the major mass market. Elon claims that high speed fully automated production is the route to lower cost. He claims that future M3 and MY cars will be untouched by human hands at the factory. People will be employed to feed the machines raw materials, for maintenance and programming but not building the cars.

That lower cost will go to their profits, or adding features to the car. Not to lowering the price. Their master plan is pretty clear about not needing a lower market price vehicle, due to their plans for their car sharing network and autonomous driving plans.

They have to overtake the camary, accord, fusion, and malibu. But their not. They are going to languish selling 100k year until they sale all 3 reservation are done. Ford and GM by then will have true affordable EVs

Well, I am shortly going to drive down to Daytona Beach, FL, from Toronto, & a coworker drove his Model S 90D from here to Key West& back over Christmas Break, so, the Long Range Model 3 will be able to do the same! What coming Competing EV’s are announced that you feel could make that same trip, just as easily?

None but any Accord,Camary,Fusion,Malibu,3series,S series can do. The question was can the 3 can become an American top seller, yes if they can deliver 300k a year but if they only deliver 100k then no. Americans want affordable and praticalllty which the 3 is not.

I actually agree with the M3 being upfront not affordable without the fed credit which will be gone by 2019 the latest for Tesla. The key word here is upfront. To many, car buying is impulse buying and very few actually crunch the numbers to see what makes more sense long term. M3 will compete in the lower luxury sedan category at $40k and is a great deal but will not compete with corolas and accords in the economy category,let’s be realistic about this.

I’m not anti-tesla or model 3. I’m anti tesla fanboys and irrational individuals. I have volt and I love it. It’s my opinion and feel that the 3 won’t hit their delivery targets and won’t be a US top seller

The M3 is a compact sedan, Camrys/Accords aren’t really their competitors, Corollas/Civics are and the problem is they’re even cheaper…Both the Civic and the Corrolla also include ACC along with all the other safety tech for around a MSRP of under $20K…While ACC & other driver assistance packages aren’t autopilot, it does offer great usability for a long highway drive…To even get AP on a base M3 you’re at with dest $41K for a black car…You’re not only going to pay double for a M3, you’re also going to have to pay more for insurances and usually DMV fees/taxes…The competitor is BMW 3 series…

But even as stated in the article reference, “techies” are the ones buying Tesla’s…Old people are resist, my parents both can’t stand regular cruise control despite having a routine weekly 100 mile drive…

Yet, AP is expensive so the price alone could turn off even people who want it…However Tesla offer a free AP 30 day trial in the past on the Model S…I have mentioned many times and even tweeted Musk (who obviously didn’t reply), why not deliver every single Tesla with a free 30 day trial of AP and during that trial to get people hooked on it?

It seems like a good idea, and that’s why I imagine Tesla has thought of it, and just decided otherwise.
For whatever reasons, though they could change their minds at some point too.

Possible reasons:
People don’t like it when you give them something and then tell them later, now you have to pay for it, or we will take it away.
(example free sc)
[drive free on sunlight forever(not really)]

With attacks coming fast and furious from all directions, Tesla does not want to “Muddy the Waters” and give more ammunition to it’s detractors.

One of the most traveled routes in the states is SoCal to Vegas…Once you get the Fontana CA, that starts the 15, you’re on that for 225 miles…A good ACC system and LKA does 90% of what you want in a driver assistance/AP system which is a single highway with minimal lane changes…The article mentions a “Camry” which does come with ACC and LKA which was why I was pointing it out…

The EPA official cut-off for mid-size is 110ft3 Passenger+Luggage Volume. The BMW 3-series is a compact, not a mid-size, with 109ft3, falling 1ft3 short:

Passenger Volume 96ft3 (4-door)
Luggage Volume 13ft3 (4-door)

We know that Tesla built the trunk for the TM3 larger than the BMW 3-series. We don’t know the passenger volume yet. (Technically we don’t have official EPA luggage volume either…) But with the larger trunk, even having just the same size passenger volume puts the Model 3 into the midsize EPA class. That’s BEFORE counting the frunk space (which the EPA doesn’t count in their numbers).

With the frunk, it is highly likely that it is over the 110ft3 mark. Even without it, chances are still pretty good given that Tesla has had beating the 3-Series in their sights the whole time they developed the TM3. I give it a more than likely chance to squeeze that extra 1ft3 out to beat the 3-Series.

I have no doubt the model 3 will drive better than Camcord but most of those buyers won’t care. If they did they would be buying Mazda 6 or reaching for BMW 3 series instead. But most are not. As for total costs show me how a $37k model 3 beats a 50 mpg $27k Camry or Accord hybrid over any time period of less than 10 years at 15,000 miles per year. To make it easy assume Model 3 is as repair free as Camcord (a generous assumption). The model 3 (used of course) will likey be by next car but if I were just looking at cost over 10 years Camcord is currently unbeatable. Hopefully that will change.

You are pretty funny. First drive reviews of the Tesla Model 3 have it driving comparable\better than an alfa romeo giulia. Secondly, the Camry Hybrid gets 40mpg (42 hwy/ 38 city), not 50mpg as you state.

2018 Camry Hybrid which is already for sale is 50 mpg combined plus or minus 1mpg. Accord Hybrid and Malibu hybrids are on top of that number too. Go check. And as I stated model 3 is $37k with delivery and if one wants a color other than black which most of us in hot climates do. As for how the model 3 drives, no argument that it will be stellar. But, most buyers of appliance cars don’t prioritize driving dynamics or looks over cost and functionality. If they did the Mazda 6 would own the mid-sized market and Alfa Romeo would own they entry luxury market.

Tesla is aiming at cars like the BMW 3-Series and the Audi A4 as competition, yes. More than one Tesla spokesman has compared the TM3 to those cars.

I suppose that’s why Tesla was taken by surprise at the overwhelming response in reservations for the TM3. Apparently it’s going to out-perform those cars in sales. Will it actually break into the Top 10 best-selling cars (not including light trucks)?

Well, I think it’s entirely possible! Just as the Model S is outselling its competitors, the Model 3 hopefully will, too.

Tesla has about 450,000 reservations, lets guess 50% in the US, so 225,000. We don’t know for sure their deliveries in 2017, but my guess is about 25,000 so now we’re down to 200,000 reservations. How many can Tesla build in 2018? They say 5,000/week rate by end of 2017 so maybe 250,000 production rate. So it seems likely Tesla will deliver about 200,000 m3 in 2018 in the US, maybe a bit more depending on ramp and when they allocate to other markets. So probably in top 10.

Exactly…The timeline is complete left out of the equation so you still have no idea when your configuration will be produced or where exactly you are in the queue even if a configuration date is announced…West coast Tesla owners do get priority so if you’re a non-Tesla owner and live on the East coast, I’d take a Vegas bet that even if you reserved online before the reveal event started you’re not getting your car until 2019…I’ve talked to a few reservation holders who truly believe they’ll get there’s in 2017 or very early 2018…

You are absolutely right that it certainly dropped off. But let’s do some fun math.

Let’s say it dropped of to just 1000 net new orders a day. That’s still 365,000 orders a year.

And this definitely is NOT the last time that Tesla will see a spike in orders. There will be more spikes when the TM3 220 36K model starts rolling off the line. Another spike when the AWD comes off the line. Another when performance versions come out. Another spike when people find out that they can order one and get one in months, not years. Another spike when there are enough cars out there that the typical head of a household making $70+ a year (who actually buys brand new cars) will have friends and relatives who own TM3’s and give them rides and tell them how they love them.

Growth begets growth.

The common wisdom is that sales will drop off when the fed incentive ends. But all these folks ordering now MUST know that they wont’ get the credit. So the signs are that new people getting in line are fine with the full $36K+ prices.

I think Model 3 has a shot at over taking the F150 in the US or the Model Y for sure.

At this point petrol is an attempt to put hereditary rule in place globally. Its politics and property model are not only its core externality even in front of atmopheric carbon but its very point. We get petrol out of our lives and we get much more volutary lives. If you don’t like having people with more money or some silly title telling you what to do then do every thing you can to get petrol fuel/energy out of your lives and help every one you know understand why they should join you. Cut as many corporate toll roads as you can as well.

Yup.
I think this is one of the very big reasons why the big car companies (who are very much in bed with the big oil companies) have been delaying EVs for so long.

An EV liberates you from the oil market. Even completely from the energy market, if you want. You can buy a solar array (maybe even battery buffered) and charge your car completely for free. Yes, it would have to be a big array to recharge quickly, but so what? It’s a real possibility. Digging for and refining oil in your garden for home use is not.

EVs are not just a new mode of transport. They are game changers for so many other industries too.
That’s why they are being fought so hard by so many established players.

I like EVs too, but I want some of the stuff you’ve been smoking! Probably 25% of the US population wouldn’t drive an EV even if it was free, just on principle. Never mind buying an EV in place of an F150.

Ha, ha, I bet if you pull up in your F-150 EV replacement vehicle and plug your power tools into the 240v outlet, that will get the attention of all those F-150 drivers!
If the F-150 EV replacement doesn’t have this sort of functionality out of the box then the manufacturers really haven’t been paying attention. There is so many opportunities when you have a big 100kWh+ battery to play with.

Timing is the problem as if you order today you get it what, two years from now at the earliest…There’s also fairly good odds they’ll remove the $35K version for those who don’t reserve…Also seems inevitable they’ll bundle it with some option, possibly the air suspension…

Let us not forget about one thing: The Model 3 has activated people who would previously have never even DREAMED of spending anything more than $10,000 on a car.

I know, I am one of them. And I know several more who’ve been saving up money for the last couple years to be able to afford it – but the same people would never ever buy a $35,000 BMW, Ford or VW ICE car.

My first car cost just below $10,000 (a used Skoda) and I was planning on using it until it falls apart. I didn’t *like* cars. I didn’t *care* about cars. I lived in a big city with good public transport until I was 30 and didn’t even *own* a car then.
Unfortunately I lost my car in an accident last year – dammit, too early – and had to spend ~$4,000 on a temporary replacement vehicle to use until my Model 3 is there.

Seriously, the Model 3 is the first car I actually *want* to buy.

Maybe it’s because Tesla is not just selling cars. They are selling a vision of changing the (mobility) world. They really want to make a difference, not just a profit.

Ford, GM, etc. just want to satisfy their shareholders. They are only starting with EVs because regulations and customers are forcing them to do so, and doing so very slowly.

The main question for me: where do the Tesla competitors get all the necessary batteries to be real competitors, not just compliance car makers? I don’t see them planning or building any gigafactory. This way people won’t trust the traditional car makers and turn to Tesla because Tesla is the only significant BEV-only car maker that really wants the electric car revolution. It’s all a matter of trust.

Really agree with this, and it is one reason I think Tesla needs to get their “at least 210mi range for $35k” base model out. If they don’t do this then their trust will go down and people will realise they are just for the big end of town. But if they do get the base model out, and quicker rather than later, then their credibility will soar, people will really believe that the Musk mission is real not just for the rich.
Personally I hope they get the base model going as that is what I can afford and really it seems to have everything standard that is important (plus I can upgrade to Autopilot later, how cool is that? Something NO other company even has on their radar, including advanced hardware for later activation).

Except that the battery makers are not scaling to demand; they’re lagging behind. That is why until rather recently, Tesla has not been able to make as many cars as it wanted to. It’s also why Tesla has invested billions of dollars in a battery Gigafactory; so Tesla, and not Panasonic, can control how fast battery production increases.

Yeah, that’s why Tesla and BYD are the only two auto makers with even the possibility of making a best-selling BEV (or even long-range PHEV) within the next couple of years.

The other auto makers will have to either build their own large battery factories, or else wait around until the independent battery makers scale up their production sufficiently to supply a large PEV (Plug-in EV) market. So far at least, their growth in battery production has been far too slow and timid.

Technically, Elon didn’t predict a single DELIVERY in August. He predicted 100 Model 3’s would be BUILT in August. And nobody actually knows how many were built or how many were delivered. Well, at least nobody who is issuing any official press releases or leaking the numbers on twitter…..

I don’t think that matters that much. Model3info says that the vast majority of buyers are planning to add options. The profit margin on the base car will not be a significant factor when it comes to the overall profit margin for all Model 3’s.

IMHO – all the ICE cars have competition — the Model 3 really has NO competition at this point (no other MFG has the charging network or range of the Model 3). So in the near term – next 2-3 years I say the Model 3 has a really good chance in being in the top 5 cars sold in the US — after that it will depend on how the rest of the ICE world reacts to the surging Tesla brand.

The model 3 is not the third generation Tesla, right? With four models produced to date, and every model unique in its own way, I thought the 3 is more like a fourth generation. Roadster, S, X, and now the 3.